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Jun232015

Woman Wants African Farming to be Cool

Tuesday, June 23, 2015 at 8:32AM

Can farming be cool? Especially on a continent where it has long been associated with hardship and poverty, can agriculture be attractive to a young generation looking for big opportunities? A young woman in Nigeria thinks so and is on a mission to show farming is a great way to get ahead in modern Africa. And she hopes more people attracted to farming will boost the continent’s food security and reduce costly imports.

Cynthia Mosunmola Umoru’s company, Honeysuckle PTL Ventures (http://www.tootoo.com/d-c3015227-Honeysuckles_Ptl_Ventures/), is based in Lagos , the business capital of Nigeria. The West African country has become dependent on food imports, despite many attempts to modernise its agricultural sector.

The country’s heavy dependence on oil exports for its income has led to poor investment in its domestic economy. Over 80 percent of Nigeria’s university graduates struggle to find work. And it is these two problems – food security and high unemployment among the country’s young, educated and ambitious – that Umoru wants to change.

Leading by example, Umoru has set up a successful and modern agribusiness focusing on high-quality food products using modern packaging and fast delivery. She produces meat products, from seafood like shrimps and prawns to snails, beef, chicken, and birds. Her niche is to deliver the product however the customer wishes: fresh, frozen or processed. Her business has its own farms and ponds but also has developed a sophisticated network with other farmers, providing them with standard contracts and benefits. This extra capacity means she can meet the demand and handle large volume orders.

She is proudly self-taught. “I didn’t have a mentor in farming! Though I have other mentors,” Umoru told the Guardian Life Magazine. “My knowledge of agribusiness has been largely from personal education and research. The Internet has served greatly as my resource bank.”

Umoru was initially on the path to study medicine, but had that dream upset by riots in the late 1990s. She then moved on to study zoology at Lagos State University. In her final year, she became interested in agribusiness. Her company was officially registered in 2004, but she had already begun at university providing meat products to fast-food outlets in Lagos.

“It took five years to gain relevance,” she said. “My involvement in the agribusiness sector is really impacting people, particularly young people like me, who I always hear say ‘If you are involved with farming then it is probably not as bad as it seems’. Farming, before now in Nigeria, was termed business of low-lives and with the barrier to entry being so high for young people to actively participate.”

“I have successfully, in my little way, impressed on my generation that farming could be glamorous and cool enough for us to trade places with the business executive in the large conglomerate and also the bank’s middle management cadre, which is the initial attraction for most young graduate(s) in Nigeria.”

She is not shy talking about how rough it was in the beginning: “As a young entrepreneur, in my very early days, I lost a lot of the seed capital I got from financial mentors to poor and bad business decisions I took because there was no one to talk to.”

Overall in sub-Saharan Africa, the long-term prospects for agriculture are good. The Food and Agricultural Organization (FAO) found in a 2009 paper that “the sub-Saharan agricultural sector — 80 percent of which consists of smallholder farmers — grew more than 3.5 percent in 2008, well above the 2 percent rate of population growth.”

Sub-Saharan Africa’s population is predicted to grow from 770 million in 2005 to 1.5 to 2 billion in 2050 (FAO). Despite rapid migration from the countryside to cities and the growth in urban population, the absolute number of rural people is also likely to continue to increase.

Agriculture is the motor for rural development, poverty and hunger reduction in sub-Saharan Africa. The FAO paper said that agricultural growth in sub-Saharan Africa is likely to be led by domestic and intra-African demand for food commodities due to urbanization and the growing population.

African farming has been able to benefit from rising global food prices and demand. The policy environment has also become more favourable, according to the FAO. The paper found “There is a particular need for programmes and policies to increase the capacity of smallholder farmers to enter dynamic sectors of national, regional and international markets.”

African farming can see serious productivity gains if it changes and it takes on new techniques. At the moment only 3 percent of the region’s food crops are produced using irrigation, compared to more than 20 percent globally.

The irony is that Nigeria has already hatched one of the world’s most successful food companies, Olam (www.olamonline.com). A global food supply company in ‘agri-products’ that got its start in Nigeria, it shows Umoru is on to something – a Southern brand can grow and go global, and overcome the difficulties of cross-border trade in Africa.

Olam currently supplies well-known global food brands including Cadbury (chocolate), Nestle, Lavazza (coffee), Mars (chocolate), Tchibo and Planters (peanuts).

With some 218 million people in Africa — around 30 percent of the total population — estimated to be suffering from chronic hunger and malnutrition, a thriving local food sector would bring many gains.

Turning to more sophisticated business models offers solutions to chronic problems. With 80 percent of Africa’s farms less than two hectares in size – and there are 33 million of them – cereal yields have grown little and are still around 1.2 tonnes per hectare in the region, compared to an average of some 3 tonnes per hectare in the developing world as a whole. Fertilizer consumption was only 13 kg per hectare in sub-Saharan Africa in 2002, compared to 73 kg in the Middle East and North Africa and 190 kg in East Asia and the Pacific. The FAO has estimated that the potential additional land area available for cultivation in sub-Saharan Africa amounts to more than 700 million hectares – a boon to the continent’s and the world’s food needs in coming years if handled well.

And the demand is there: Between 2001 and 2007, annual increases in the global consumption of agricultural commodities were larger than during the 1980s and 1990s. The quantity of agri-products harvested in the world is 5.2 billion metric tonnes a year.

“I have been able to reach out to so many people across the nation, preaching the agribusiness development and adoption gospel,” said Umoru. “I have also worked closely with other youth agencies to empower many more young people to aspire in Nigeria.”

One such agency is the Harambe Nigeria Endeavour. Harambe Nigeria (http://www.hendeavor.org/content/bgroups/nigeria.php) is a programme designed to stimulate growth in the agricultural sector and open up opportunities for youth to become leaders and entrepreneurs in this area. And this means future young entrepreneurs going into the agricultural sector will not feel as alone as Umoru once did.

As Obinna Ukwuani, creative director of Harambe Nigeria says: “We wish to rectify the tarnished image of agriculture in Nigeria, making it a viable investment for Nigerian youth from all walks of life.”

By David South, Development Challenges, South-South Solutions

Published: May 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

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Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

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Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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Growing a Southern Brand to Global Success: The Olam Story

Wednesday, April 22, 2015 at 11:30AM

Most people haven’t heard of Olam International, but they know the brands they work for and they more than likely eat their produce. The story of Olam (http://www.olamonline.com) – a global food supply company in ‘agri-products’ that got its start in Nigeria – shows how a Southern brand can grow and go global, and overcome the difficulties of cross-border trade.

Olam supplies well-known global food brands including Cadbury (chocolate), Nestle, Lavazza (coffee), Mars (chocolate), Tchibo and Planters (peanuts).

Olam not only survived its startup in Nigeria, it has thrived, trading around Africa and across the globe, becoming a major supplier to the world’s top food brands.

The quantity of agri-products harvested in the world is 5.2 billion metric tonnes. In that market, Olam is a significant producer of cashews, peanuts, spices, beans, coffee, cocoa, sheanuts, packaged foods, rice, wheat, barley, sugar, cotton, wood, and rubber. It is already the world’s largest supplier of cashew nuts and sesame nuts and in the top three for peanuts. Olam’s cashew business in Africa provides work for 17,000 people, 95 percent of whom are women.

Olam also uses its success to play a critical role in securing the world’s food supply and has specialized in meeting the food needs of the world’s rapidly growing population, especially in China and India. Between 2001 and 2007, annual increases in the global consumption of agricultural commodities were larger than during the 1980s and 1990s. Higher incomes are leading to higher consumption of proteins like meat. And as meat demand rises, so does the demand for grain and protein feeds to produce the meat. It takes two kilograms of grain to produce one kilogram of chicken, four kilograms of produce for one kilogram of pork, and eight kilograms of produce for one kilogram of beef.

Chris Brett, Olam’s senior vice president and head of corporate social responsibility and sustainability, said the company tries to blend business success with wider social goals.

“We are one of the few businesses investing in rural environments and am tackling the problem of urbanization,” said Brett in Olam’s London office – the company’s global headquarters is in Singapore.

In 2008, it won the World Business Development Award for its contribution to achieving the Millennium Development Goals (MDGs) (http://www.un.org/millenniumgoals/).

Olam also has been recognized for its contribution to global food security. By providing farmers with credit to help build their communities, it has also been able to revive declining rural economies and help stem the outflow of farmers to the big cities and urban slums.

“Many countries are afraid to lend to farmers,” Brett said. “We gather the farmers together in groups of 500 and Olam manages the loan while a local bank receives the money. Defaults have been low and farmers are building up a credit rating. In this way, farming becomes a business not just a subsistence existence.”

The dramatic changes taking place in African countries – especially rapid urbanization that has made the continent home to 25 of the world’s fastest growing cities (International Institute for Environment and Development) – means there is an urgent need to increase food production and stabilize rural economies to support farming.

Olam International, started in 1989 in Nigeria by its India-born CEO Sonny George Verghese has many lessons for any Southern entrepreneurs who have their sights set high.

After developing its skills in exporting cashew nuts from Nigeria, Olam moved into cotton, cocoa and sheanuts. From 1993 to 1995, the company explored ways of taking their skills into other countries and different products. It was a period of rapid expansion into other African countries including Benin, Togo, Ghana, Cote d’Ivoire, Burkina Faso and Senegal.

Olam now operates in 26 African countries.

There has been a renaissance in South-South trade in recent years before the current economic crisis, growing by an average of 13 percent per year between 1995 and 2007. By 2007, South-South trade made up 20 percent of world trade.

Olam started with one product, got its supply right, and then started looking around and seeing what other products and services it could offer, applying already-tested expertise and supply skills – what the company calls the ‘Olam DNA’.

Olam claims its success has come from building strong relationships with farmers to guarantee high standards for the food products. The company does this by tightly tracking its stock and its quality. Olam then uses the information to analyze risks to the supply network. The company also keeps both warehouses and field managers close to the farmers. Olam estimates 65 percent of its profit comes from managing the journey from farmer’s field to factory gate.

Its selling point to customers is the ability to guarantee the entire journey from farmer’s field to factory gate, taking on all the risk and stress for ensuring the product is of the right standard and delivered on time.

Its niche is to provide the food products required by some of the world’s top food brands. The company has grown from just one product in Nigeria and two employees in 1989, to directly employing over 10,000 people worldwide and supplying 20 products in 60 countries, according to Brett. He says the company, which had a total 2008 turnover of US $5.75 billion, was “born out of Africa.”

Brett says the company is now “investing heavily in Africa in processing and distribution centres” – proof that a success story feeds back into more success and investment. It has been able to use its profits to go back and buy up failing businesses and former state-run enterprises, and modernize them. Olam now grows the food, processes it, and transports it to market.

Olam actively works with international donors, global NGOs like Technoserve (farmer business development), WWF (environmental impact of supply chain), and the Bill and Melinda Gates Foundation (cocoa and cashew farmers).

Olam, however, has received criticisms for its past practices. The global environmental group Greenpeace attacked its logging in the Democratic Republic of Congo (DRC) (http://www.greenpeace.org.uk/tags/olam), and the International Finance Corporation (IFC) divested its holdings from Olam for it trading illegally cut timber.

Olam and the Gates Foundation project are working with 200,000 cocoa farmers in West Africa to double their incomes. In Ghana, cocoa farming has become synonymous with poverty and perceived as an occupation of last resort. The work force is rapidly aging and the industry will die out if it doesn’t become more profitable and attractive to young people.

“We want the farmers to be profitable, the transporters to be profitable,” Brett said. “We believe a supply chain does not work if one player takes too much.”

And what advice does Olam have for budding food producers and growers? “Catchy, simple brands work. Our Mama Mia pasta caught the wave of the Abba revival.”

“Our Tasty Tom brand became very popular in Africa so we extended the brand into other products than just tomato paste. You reduce the cost of advertising by extending the brand name.”

“We feel SMEs (small, medium enterprises) growth is critical because it would give us more support. If more people invested in SMEs, we would have more people to do business with. We want to be able to make deals: they could be entrepreneurs.

“If you can add extra value it costs nothing but time.”

Brett advises budding SMEs: “It’s all about quality: trust and shared business ethics like formal contracts. When you have those, the bigger brands will give you support.”

By David South, Development Challenges, South-South Solutions

Published: October 2009